Ed Balls: I have not U-turned over non-dom rules

Balls argued that the video had been misleadingly edited (Source: Getty)

Labour's shadow chancellor Ed Balls hit back at the Tory party yesterday after being accused of contradicting himself over a new plan to end non-doms’ tax status.

Balls, along with party leader Ed Miliband, said that a Labour government would scrap the non-domicile rule that allows people to reduce the amount of tax paid on earnings from outside the UK.

A similar system would remain an option on a short-term basis of two or three years, Labour said.

Nonetheless, the Conservative party went straight on the attack, publishing a video from January in which Balls said: “If you abolish the whole status it will probably end up costing Britain money.”

Balls argued that the video had been misleadingly edited. “They have dropped the part of my interview where on non-domicile rules I say, ‘I think we can be tougher and we should be and we will’. That is exactly what we have proposed [today],” he said.

Chancellor George Osborne said the policy announcement was “a complete shambles”, and that he had hiked the levy non-doms pay .

Simon Walker, the director general of the Institute of Direct­ors, said: “Attacking non-doms is a shrewd political move, but the economics of the proposed reforms are unconvincing. It’s very unclear what additional revenue would be raised, but the UK’s international reputation would be put at risk.”